Over the past 2 decades, victimization among school children has become a growing public health concern. Once believed to be a normative and even acceptable part of growing up, this myth has now been dispelled. Consequently, researchers have become interested in understanding why some children are more likely to be victimized, and how this victimization affects their well being. The goal of the proposed research is to identify the psychological, emotional, behavioral, and physiological antecedents and consequences of victimization. A transactional model is proposed to explain how victimization in the peer group influences a range of developmental processes, which then place children at further risk. Specifically, this model posits that exposure to peer victimization contributes to maladaptive social-cognitive processes, ineffective emotional and behavioral self-regulatory responses, global emotional and behavioral dysfunction, and heightened adrenocortical reactivity. These developmental consequences, in turn, are proposed to heighten children's sensitivity to future interpersonal stress, as well as to cause children to generate additional stress in their relationships, including further victimization. Personal attributes of children and characteristics of victimization experiences are expected to influence how children react to victimization. This model will be evaluated in the context of a prospective longitudinal study. 400-second graders will be followed across four years using child, parent, and teacher reports. A sub-sample of children will participate in two observational procedures. First, observations will be conducted of natural playground interactions each of the four years to examine children's experiences with familiar peers, including incidents of victimization, and how they respond to stressful situations. Second, observations will be conducted using a laboratory paradigm to examine victimized children's responses to a social challenge during an interaction with an unfamiliar peer. Evaluation of the proposed transactional model will advance efforts to understand how children and their environments jointly contribute to development, and will provide a broad conceptual framework for understanding long-term risk in victimized children over time and across social groups. Moreover, this research will provide a basis for the creation of child-level and school-level programs designed to interrupt the cycle of victimization, violence, and distress associated with maltreatment by peers.